You’ve chosen to trade crypto, and now you’re getting ready to choose a trading strategy. You may be asking yourself, “Why do I need a strategy?” Well, the truth is that no matter which of these four types of strategies you decide on – ranging from basic buy-and-hold to more advanced day trading or swing trading, you need one.
A good strategy will help you formulate a trading plan, as well as make your trades more efficient and less risky. You’ll be able to boost your confidence by knowing exactly what you’re doing, how much risk is involved when it’s time to take profits and cut losses, and if/when there are divergences on your charts, you’ll know just what to do instead of panicking and making bad trades.
We’re going to look at four crypto trading strategies today:
1) Buy-and-hold
2) Basic scalping
3) Advanced day trading
4) Swing trading.
Buy & Hold Crypto Trading Strategy
The buy-and-hold strategy is all about buying an asset at a certain price and letting it sit until you are ready to sell. If you choose the right price, this can be extremely profitable over time. Bitcoin (BTC) has been buy-and-hold crypto for years, as well as many top altcoins such as Ethereum (ETH), Litecoin (LTC), and Ripple (XRP).
A buy-and-hold strategy is the most simplistic of all four crypto trading strategies, but it requires patience. It also means you’re not in a hurry to sell or “close” your position. If you don’t believe in this type of investment plan, then that’s okay!
Basic Scalping Strategy
Basic scalping is one of the most basic strategies, especially in terms of timing. This involves buying and selling a crypto asset within the same day. This can be used for trading with the Bitcoin Up with the hopes of making small profits by taking advantage of really small price discrepancies.
Essentially, you will buy on one price and sell a little higher or lower in order to make your money back on what you initially invested. If you get it right (which can be difficult), you can make some nice money, but if you mess up even a tiny bit, then it’s possible that you lose everything in one trade.
Advanced Day Trading Strategy
This technique involves buying crypto-assets and then waiting for them to rise in value over time before selling them off at a higher price. It is closely related to the basic scalping strategy, with one key difference: Day trading involves holding crypto assets for longer periods of time.
Basically, this means that you’re basically going from day-to-day without selling your portfolio until there are enough profits to gain interest on what you invested as well as a decent amount of growth. This kind of day trading is riskier because the prices can fluctuate significantly on a daily and even hourly basis, so you have to be quick with your trades or risk losing everything.
Swing Trading Strategy
For those of you who are interested in swing trading strategies, these involve buying and selling assets over a longer period of time (usually months) with the goal of making both quick profits and long-term gains. Swing trading is a mix of day trading and buy-and-hold strategies, but instead of holding onto assets for weeks or months, you’re basically “swinging” in and out of positions overnight.
However, there is a lot of risk in swing trading because you could lose everything if the markets are going crazy overnight and you’re away from your computer. It’s not like day trading when you can see all the charts instantly online and check them out while holding onto positions.
Summary
Crypto trading strategies are quite complex, and there’s really no way to grasp all of the knowledge you need unless you study and learn over time. Sure, we’re only looking at four different strategies here, but there’s still plenty more that can be learned about crypto trading.